Enron crimes get scant punishment: justice still has yet to be served in ongoing Enron investigation, raising troubling questions about how the U.S. legal system punishes white-collar crime

0 Comments | Insight on the News, Jan 7, 2003 | by Kelly Patricia O'Meara

Anderson adds, "I'm in no way letting these people off the hook, but the problem is you have to ask how much of the real information was hidden from the board. And how much of the problem was actually one of believing in their own hype--believing there really was a new economy. Another thing people have to look at is that these people were on the board not because they were so smart or clever, but rather because of their political connections."

As Anderson sees it, "Enron was a political company. It was constantly seeking and getting political favors, enriching itself with government contracts, and the boards of such political companies rarely have the antennae to notice authentic business problems before the fact. I don't know what went on at those board meetings, but I seriously doubt that Wendy Gramm [the former commodities regulator who is the wife of former Texas Sen. Phil Gramm] was poring over the books. Should these people be held liable? Yes. But whether there is criminality is another question. On a criminal level you have to come up with a standard of proof to establish that they knew they were committing outright financial fraud. I think criminal statutes need to be applied in a way that serves justice. Some people might like to see Wendy Gramm and Ken Lay in jail, but the question is whether that would serve justice."

Paul Leighton, assistant professor of criminology at Eastern Michigan University and founder of www.PaulsJusticePage.com, sees the situation a little less charitably. "Part of what seems clear from Enron and all of these recent corporate bankruptcies," explains Leighton, "is that a lot of people knew the bubble wasn't sustainable. A lot of them were involved in sham transactions to keep the bubble going and they really had a keen sense of where the breaking point was and when to get out. They took advantage of the irrational exuberance of the 1990s and, as it went on, their behavior got more and more outrageous."

"My guess" continues Leighton, "is that the people being sued for the Enron mess will be better off than if they hadn't committed the wrongdoing. The lawyers certainly will be better off, but the people seeking to recover damages will get pennies. And still we haven't put anything in place to change it the next time around. We don't even have a basic government report on the extent of economic crimes. The FBI publishes a yearly crime report that gives us data on homicides, rapes and murders, but we don't have a similar report on the other side about financial frauds, stock swindles and other white-collar crime. There's no annual report, so when these things blow up they're just unconnected episodes."

Leighton says, "You can't legislate honesty, but you can nudge these people in the right direction by asking for accountability and transparency. As it stands now, there is no moral condemnation when that role is violated and there certainly are no criminal consequences for it. I suppose you could use the terrorism standard. They could be listed as `persons of interest,' kind of a corporate radar screen that should be checked out periodically."